Some Florida residents are still trying to get their finances in order and recover from a struggling economy. One of the options that people have is filing for bankruptcy, but for a filing to benefit individuals the most, they need to understand how bankruptcy works. One of the most important parts of this is knowing which assets are exempted from the filing process.
When people file for bankruptcy, they can have their credit card debts wiped out entirely, in some cases without having to send another dime to their lenders. However, sometimes people’s assets are sold or used in an attempt to pay creditors off. Many states exclude things like homes and automobiles from being used to pay off debt, but the contents of savings and checking accounts can sometimes be used. One type of asset that is exempted is a 401(k), which is a relief to many people who want to be sure that they will still be able retire after they file for bankruptcy.
It is important to note that even assets, such as 401(k) accounts, that are exempted will not remain so unless they stay where they are. For example, if someone cashes out their retirement account to use the money to pay for living expenses before they file for bankruptcy, that money would then be eligible to be used to pay off debts.
A lawyer could help someone understand what is involved in filing for bankruptcy and what to expect throughout the process. Additionally, a lawyer could help someone with the filing paperwork and ensure that they receive the most benefit from the filing possible, so they can have a fresh financial start.
Source: Court, “Will my 401(k) be Safe if I File for Bankruptcy? “, Justin Harelik, June 19, 2013